Overview
- An international report from the Bank for International Settlements warns that leading crypto platforms now offer bank-like lending and yield services without core safeguards.
- The report says high-yield “earn” accounts function as unsecured loans because platforms take control of user assets and reuse them in lending, trading, or market making.
- Customers become unsecured creditors of the platform and may face losses or frozen withdrawals with no deposit insurance if the firm runs into trouble.
- The BIS cites the collapses of Celsius and FTX and a $19 billion wave of forced liquidations in October 2025 as evidence of concentrated leverage and thin liquidity.
- Researchers describe vertically integrated firms that bundle trading, custody, leverage, and token issuance under one roof, which heightens failure risk and could create spillovers into traditional finance as ties to banks and stablecoin issuers grow.